"If you have IRAs (or previous employer
plans that can be rolled into an IRA), this may be your best
bet.That’s because IRAs can be used for higher education
expenses penalty-free and don’t need to be paid back.You
may still have to pay taxes on the withdrawal but if you take the
withdrawal in a year that you reduce your work hours, you could
end up paying little or no taxes on it since you’ll likely be in
a lower tax bracket. (Roth contributions can be withdrawn
tax-free for any purpose, including education expenses."

Before you start eyeing your nest egg, however, ask yourself a
couple of questions first:

1. Can you afford the hit to your
investments? Bukszpan estimates the majority of
investors see 6 percent returns over time, which is less than the
interest accrued by federal unsubsidized student loans (6.8
percent). If that's the case, then you'd be paying more in loan
interest than you'd stand to gain on your investments. Dipping
into your IRA might make sense in that case. But keep this in
mind: Some federal subsidized student loans have interest rates
as low as 3.4 percent.

2. How long until you retire? It's no
secret Americans are having a harder time than ever funding their
retirement accounts. Before deciding to withdraw from your
retirement plan, be sure to review your retirement goals and the
progress you have made towards those goals. Interest rates are
relatively low compared to other forms of debt and they can often
be written off on your taxes.